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The Malaysian Minister of Human Resources has announced an overhaul of the Employment Act 1955. The changes will come into affect on January 1st 2023. The changes aim to bring the Act to ‘international standards’ as required by the Trans-Pacific Partnership (TPP), the International Labor Organization (ILO), and the Malaysia-United States Labor Consistency Plan.
A significant change relates to the amendment of the First Schedule of the Act, allowing all employees regardless of their salary or the type of work they perform to enjoy added protection under law.
Previously, the Employment Act 1955 applied only to employees earning less than RM2,000 per month, or employees employed as manual labor or as supervisors of manual labourers, employees engaging in the maintenance and operation of mechanically propelled vehicles; domestic servants; and those employed on seagoing vehicles, regardless of salary.
Other employees were only governed by the terms set out in their direct employment contracts.
The change will see the Employment Act 2022 cover any person who has entered into a contract of service. Certain subsections regarding rest days, working on public holidays and overtime pay (and others), however, will only apply to people whose monthly wages do not exceed RM4,000, (unless they are labourers or supervisors of manual labor or drivers), or who are employed as domestic workers.
Key upcoming changes in Employment Act 2022
Calculation of wages for incomplete month’s work
A formula has been introduced to calculate wages for an employee who works for less than a whole month, for example when they commenced employment after the first day of the month, or when employment was terminated before the end of the month.
( Monthly wages / number of days of the particular wage period) x number of days eligible in the wage period
Paid maternity leave
Paid maternity leave period has been extended from 60 days to 98 days. This comes into effect for babies born on or after January 1st 2023.
Paternity leave
Newly introduced into the Act entitles a married male employee seven consecutive days of paid paternity leave for each birth, up to five births. This entitlement is subject to the employee being employed by the same employer for at least a 12 month period immediately preceding the commencement of paternity leave, and having notified his employer of his spouse’s pregnancy at least 30 days from the expected confinement or as early as possible after the birth.
Working hours
The maximum working hours for employees will be reduced from 48 hours to 45 hours per week.
Sick and hospitalisation leave
This proviso to section 60F of the Employment Act has been deleted. This has the effect of entitling employees to 60 days of paid sick leave if hospitalisation is necessary in addition to 14 to 22 days of paid sick leave (depending on length of service) if hospitalisation is not necessary. Previously, the total sick and hospitalisation pay in a calendar year was capped at 60 days.
Flexible working arrangements
Employees can now apply in writing to their employer for a flexible working arrangement to vary his hours, days or place of work. The employer is required to respond in writing within 60 days. An employer who refuses the application is required to state the ground of such refusal.
Additional changes in Employment Act 2022
Additional changes in the Employment Act 2022 include updates to language use, increases in fines for non-compliance, outlawing forced or bonded labour, and increasing the jurisdiction of the Director General.
Apprenticeship contracts have been limited to a duration of 24 months, with an imposed minimum duration of 6 months. Employers are now required to seek the approval of the Director General before employing a foreign employee and the Director General may now inquire into and decide any dispute between an employee and his employer in respect of any matter relating to discrimination in employment.
Download the PDF from HR Forum for full insights into the upcoming changes.
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